Telstra and News Corp’s secret broadband deal stalls

Foxtel, owned by Rupert Murdoch’s News Corp (ASX: NWS) and Telstra (ASX: TLS), has made plans to launch a triple play in the Australian broadband market, but negotiations seem to have stalled. The pay-tv operator is Australia’s most profitable media company, reaching 30% of Australians, but the triple play would offer broadband, pay-tv and telephony in one package – a strategy aimed at improving its market share. Under the two owners’ shareholder agreement, Foxtel cannot launch a broadband service without the approval of Telstra, which controls around 47% of the Australian broadband market. It would likely approve the offering on the…

You can continue reading this story now by entering your email below

You’ll also get all our free premium research including:

What’s next for bank shares, including which one to buy, and crucially, which ones to avoid.

How to cash in on some of the hottest stocks on the ASX.

Some of the best fully franked dividend shares to buy now.

Cheap and good small-cap stocks that are flying under the radar of the professionals.

Foxtel, owned by Rupert Murdoch’s News Corp(ASX: NWS) and Telstra(ASX: TLS), has made plans to launch a triple play in the Australian broadband market, but negotiations seem to have stalled.

The pay-tv operator is Australia’s most profitable media company, reaching 30% of Australians, but the triple play would offer broadband, pay-tv and telephony in one package – a strategy aimed at improving its market share.

Under the two owners’ shareholder agreement, Foxtel cannot launch a broadband service without the approval of Telstra, which controls around 47% of the Australian broadband market. It would likely approve the offering on the condition it was the wholesale provider for Foxtel – something some analysts believe will put Foxtel at a competitive disadvantage when the NBN is rolled out.

Instead of paying the NBN Co for direct access to the fibre optic network, Telstra will be able to charge a price as a wholesaler between the two companies, putting Foxtel at a disadvantage to competitors.

Foxtel has considered this type of offering because of increased competition from iiNET’s(ASX: IIN) Fetch TV, Quickflix(ASX: QFX) Play and huge international internet-based broadcasting services such as Netflix(NASDAQ: NFLX) and Hulu. Foxtel has already begun to counter the increased competition by implementing a new service called Presto, but it might prove too little too late unless they can attract customers with their unique offering.

According to The Australian Financial Review, discussions have broken down between Telstra and News Corp because of the uncertainty surrounding the NBN and the price its owner would charge the Telco for access.

Foolish takeaway

Australia’s market for internet-based broadcasting is largely untapped and companies could stand to draw massive amounts of revenue from the industry. It would seem however that the arrival of Netflix and Hulu is the force to be reckoned with and unless negotiations can progress, they risk being left behind.

Motley Fool contributor Owen Raskiewicz does not have a financial interest in any of the mentioned companies.

The 5 mining stocks we’re recommending in 2019…

For decades, Australian mining companies have minted money for individual investors like you and me. But if you believe the pundits and talking heads on TV, those days are long gone. Finito! Behind us forever…

We say nothing could be further from the truth. To earn the really massive returns, you’ve got to fish where others aren’t fishing—and the mining sector could be primed for a resurgence. That’s why top Motley Fool analysts just revealed their exciting new research on 5 ASX miners they believe could help you profit in 2019 and beyond…

Including:

The best way we see to play the global zinc shortage… Our #1 favourite large-cap miner (hint: it’s not BHP)… one early-stage gold miner we think could hit the motherlode… Plus two more surprising companies you probably haven’t heard of yet!

For free access to our brand-new research, simply click here or the link below. But be warned, this research is available free for a limited time only, and we reserve the right to withdraw it at any time.

Free report names the 3 dividend shares The Motley Fool's crack team think you should buy now for 2019 and beyond.

Sign up now for instant access to your copy of this free report.

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe at anytime. Please refer to our Financial Services Guide (FSG) for more information.

This Service provides only general, and not personalised financial advice, and has not taken your personal circumstances into account. The Motley Fool Australia operates under AFSL 400691. For more information please see our Financial Services Guide. Please remember that investments can go up and down. Past performance is not necessarily indicative of future returns. The Motley Fool Australia does not guarantee the performance of, or returns on any investment.